Earnings call transcript Q3 2023

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Operator

Hello, everyone, and welcome to the Q3 FY 2023 Vista Outdoor Earnings Conference Call. My name is Nadia and I'll be coordinating the call today. [Operator Instructions]

I will now hand over to your host Tyler Lindwall, Vice President Corporate Development and Treasury and Interim Vice President Investor Relations to begin. Tyler, please go ahead.

Tyler Lindwall

good fiscal everyone year and our us operator, quarter third XXXX you, morning joining to for Thank earnings call. morning President, Andy this Officer; Interim me is Interim Officer. McArthur, With Chief Chief Jason Financial Vanderbrink, Vice Sporting Keegan, and Products; President and Gary Executive

known will forward-looking make of begin, today. uncertainties. we which release These these Reform reflect more Outdoor's the harbor SEC Vista like provisions statements Private estimates to Outdoor of based and to operate. statements information information today's I'd forward-looking face Securities and risks and Act. Vista on in several industries we on remind everyone you under us press making Before during our we are best the our statements, subject the Litigation today's for that to statements factors and to that filings We call, forward-looking risk uncertainties these be and we and encourage These assumptions review safe understanding

Please we have this materials which a at presentation also measures. note website reconciliation supplement comments include and morning that non-GAAP on investors.vistaoutdoor.com financial our our of posted

Gary, turn it you. over I'll to

Gary McArthur

Thank appreciate this you all joining you, morning. us of We Tyler.

been third the moment request discuss Metz of the transition at quarter to would we and take to as I appointed resign have a serve effective agreed has immediately. our Before we announced to as and to Director a like CEO the interim Chris address results, that today. as CEO I CEO Board

working to his endeavor. well On the Board, with with many Vista confidence involving in reporting him for into Outdoor a not Chris's access was transition. based financial of ensure contributions in loss to I his institutional to and on ensure entire controls. entered his seamless look agreement internal We've resignation the leadership appreciate to forward and of Chris' Board's I or wish reasons to him behalf next an knowledge Chris

as including XXXX Hill I more years served Outdoor's of a before member CHXM of spent and Board CFO its Previously, Together have XXXX directors, Outdoor of planned of brief deeply the Harris for way involved served Directors oversight from a at since strategy, eight to the Outdoor with as execution XX By and of introduction, I CFO separation than that, in my XXXX. been Vista have including as and Vista Corporation, years. our I of Products Sporting the fellow segments. serving

pivotal I to this time look history. CEO forward as Vista serving interim Outdoor's at in

in year and clear a I'll which on track cover later in remain my remarks. XXXX, separation to have more strategic in We path detail calendar complete the

am momentum to I Outdoor's confident Vista on strong and capitalize strong balance iconic that unmatched resilient we continue portfolio brands, will of our model operating with sheet.

to positioned create well very our compelling shareholders. value are We for

quarter that, our With turn discussing to will third results. now I

their Outdoor like would major entire all I two achieve foremost, and and thank again families for employees to quarter. First work team for all Vista to Vista Thanksgiving did to you many our help holidays, and you enough that during time The our solid leadership The away customers. our Outdoor from employees hard the of quarter. can't spend help teams support meaning thank included period results Christmas, this

away key our with call you takeaways. from walk for like today I'd to four

calendar the strength, from on our we spin year are for reaffirming a are and We expectations be of XXXX. to operating position separation is in track completed

free our via growing prudent practices. inventory brand of sheet and long-term strong own discipline our management use and of cash a and wallet We of operating strength. robust share healthy because we're cash generation, flow encouraging Our disciplined is outlook balance and maintain

was period were $XXX $XX prior XX% and challenging XXXX, in Total delivered year sales results solid the million from which a environment. same over period again Moving to the quarter. down pre-pandemic. up fiscal the million year We in

Sporting and Our posted consistent XX% up period in guidance. were million the prior with over year sales previous record same XX% the $XXX year XXXX. million over Outdoor X% period sales segment the fiscal year over Products and period product up of $XXX prior down

performance fiscal year in The XX% was the over same up quarter's period XXXX.

XX.X%, adjusted Our period long-term of higher is which approximately fiscal points same EBITDA XXXX above X,XXX XX%. margins roughly in were XXX basis the than points basis year and target our

and free million our bringing the We a up generated prior $XXX XX% year cash quarter in $XXX million same over year XXXX. the period record total of to period in for XXX% year-to-date higher the fiscal flow

the to earnings built XXXX. have be diversified across out brands own. of a XX of we our per reach Through resources leverage in to and year allowing that of would achieve same of execution financial us strategy, $X.XX iconic levels any long-term results in a portfolio our portfolio adjusted position performance Lastly, excellence one are was fiscal share its in brand shared our and we on from that strength. continue our XXX% prove These period of higher approximately transformation is which operating for

place are in that acquisition. businesses. $XXX each XX or revenue grown not of purchase more is a strong This overnight. testament now operators at have are who We that million annual have than we executives brands a of Leading generate through and our talented brands stable to created organically the power either in

Sports to integration our Action provide I of business To update a the want brief Fox Racing on unit. and that end,

have and of business number a also synergies initial have our identified additional synergies quick We captured case. above

the the of sports announce and new multi-brand to snow to We're provisions. also platform leverage heights. President, am I our brands guide to and combined of the Jeff pleased McGuane the cycling become seven will Fox strength Racing President power current doing more new

and to shared present individuality, focused is prioritize a expansion, while each platform enabling Congratulations be exciting branch on for synergies scalable margin on and will building operational creativity ingenuity. role this state accomplishment. Jeff's Jeff

took to he the like when and incredible would Bell/Giro. ranks. last leaves over significantly of stronger thank an former Ric I the Ric few led Kern, business the President recovery also than years the

and to bolster corporate resources have cultures, profitability founder's supply We a across initiatives and distribution shared chain, mentality commerce capabilities. our instilled expanded digital created and brand

We and and eight deepened to broadened across that total brands outdoor successfully categories addressable activities. further variety acquisitions integrated portfolio market, closed have diversified of serve our our consumers a have and our leading of increased

added and together, our resilient we of we've while also profile the result improving a and the win-win that well-positioned is well-known margin ahead. of for growth space, in revered our most demonstrates This outdoor brands and a are a road some the dedicated Taken execution team and against strategy.

lays for industry the in takeaway. and our position separation strong second foundation our plan is the key Our

XXXX. in independent last equal companies We the reaffirming and our to year are The calendar May be traded named nearly announced separation by to revenue. soon be create completed two size of separation expectation publicly for will

Golf, segment CamelBak, on the be Fox portfolio Following Chef, separation through brands Bushnell, categories to of including QuietKat, Speer. industry-leading will HEVI-Shot, our its will Remington Giro. Outdoor continue CCI, Racing, Simms Bell, Sports, products and focus Foresight renowned Federal, including Camp an brands Stone ammunition Fishing Sporting Products outdoor Glacier. Bushnell and

Products As will value strategic independent supporting a companies with shareholders allocation and Outdoor focus enhanced expanded opportunities. resources, and compelling to retain priorities, for capital Sporting strategic Products top strength tailored have attract ability talent, both and and

diligently may XX working last they stated SEC have As address have. questions with Form to the the confidential with quarter, been we filed and any we them

spin our confident XXXX. ability are year calendar the to complete in We in

in members Board about We the of and the company months. also for teams, each plan coming to share names details management

stay So tuned.

continue leave to to we high we to is encouraging you the our our market, response resilient takeaway positioned at broader a and macroeconomic impacting interest key purchasing with third Our that in and back long-term to shareholder returns. believe brands pressures and look to rates. consumer Taking is behavior higher are outlook inflation well drive step see

still inventory discounted levels promotional categories many are remain see Overall, retailer patterns in tightening We and high. purchasing consumer to items. seeking buy or some

prior that we period. to We in we coming to and positive return the normalized to are expect continuous more seeing signs saw the in compared emerging the quarters retailers year purchasing restocking

In of some have our are inventory. and retailers at addition been reorder add the retailer to shelves additional and conscious categories

the are counts China guidance the in related monitor COVID-XX to related situation continuing case to to We lockdown. and changing

has to We quickly us allowed China necessary. team to react issues have large adjust and a that as in

headwinds our Even still seeing for with brands. these demand positive are and industry data we

still indicator quarters. inventory We and are that and DTC demand purchasing recreate outdoors. believe will good Products their normal to specifically Outdoor products in consumers are accessory start Our resume of continuing up, pull-through leading line through sales a the are coming our demanding work the appearing that their in retailers as patterns

is Given GDP some in we jobs. data such latest of higher in economic the output, and price level a X.X% billion $XXX generates certain national to million recreation reductions at as our normalizing for the success categories than of economy According X-millimeter, demand pre-pandemic. believe government outdoor X.X with example, targeted

outdoor industry the entered participate our more the addition participation years. we participation In begins Once net past someone outdoor continue our outdoor In specifically And the the to categories the than these industry many more sticky. serve. strong across figures, that of XX in data to that further recreation numbers over activities. is and see brands suggests in have broader participants million new promising to five

this of and I want to golf, that resiliency a highlights market the snow few including in categories industry, demonstrate To e-bikes. compete, we share certain

the number combined success Foundation with Based Golf attributed much to topped posted combination holiday strong performance, XX this as record Americans reported XXXX, data, business history as our highest products, the it and in on XX found of launch in Golf surprise off-course that comes at million National with that of new million. recorded. year-to-date roughly Bushnell Research Now, of on ever golfers the the sales no

are continuing year. trends this These

with versus a were Giro than Tenaya seen XX% e-bike direct We more research popular. the sales comparable also is year This adoption the for prior up the snow for new have the more consumer becoming that from of powered this year-to-date people to and are coupled year-to-date November. snow government strong by According period. growth up stronger and launch season, benefit through Tor sales corporate bikes, incentives and XX% latest helmets. were

see our an with secured of Denver, only city business, shooting e-bike an example, to from XXX so In representing plans industry, a we continue females just was QuietKat to with participants to QuietKat program. as the in up and hunting ago. decade a growing XX% rebate a Fortune it in diversity a engagement XX% agreement e-bikes sports For and major Sporting employee in popular, expand provide Products company program the of part

shooting business few growing elaborate industry a XXXX the will of the moments. Sporting health from sports of indicator remained further checks XX% Jason on in strong pre-pandemic NICS growth. in Additionally, Products

the our points our in existing these how numbers. Although record serving not who business new capture snapshot provide to expand while still exhausted, base recreating strong is are continuing participants, on and a consumers data of reach

launch pressured been The of brands Chef that products premium its and The continue to Chef's Woodwind excited excess entry great new are channel inventory loads compelling through partners Chef strength That challenged products. door for our into innovation still brand. more cooking of earning Camp same strength successful market Camp our in is we share on has the to example. categories, is work. brand a Camp that Even by our for results said, shows Pro strong demand the exists deliver and is and channel true discounting. and our

Stone accounting and with December aggressively. quarter Monday discounting over Glacier specifically year-over-year the also competitors Cyber an with happened quarter. Friday unique performance was zero period -- One had the promotions, discounting Money Revenue third up or even and are of year to Their is the while growth. third of for Stone same strength Glacier triple-digit attribute Black excellent brand. last

delivered excellent investments Additionally, DTC customer power Simms driven digital exhibits were capabilities. the strong most Vista's growth over in the XX% recent with up brands compared acquisition acquisition quarter, in which the of prior XX% and Fishing sales, by year, premium the our to quarter during

Our is sheet. last health balance theme our the of

a balance times. a in and to invest us even continues in with pillar sheet provides Our long-term advantage is of be to strength growth and flexibility competitive challenging

continues flow remain testament $XXX year actions cash first practices, These use our times, X.X have our to of the value debt have XXXX management rigorous million, our This to leverage our X.X generated times a our year-end us ratio paydown, to below monitoring of cash significantly we customer continue net And two XXXX, to a and robust. debt-to-EBITDA nine fiscal in of up of months free range Our of allowed year-over-year. times. terms. vendor and fiscal and maintain the one prudent inventory record targeted is of year XX% within

This This sustained product research is lifeblood year-to-date stability R&D XX% development, year-over-year. company. of which and new supported our in increasing by our investment the by spend

Products plan in and of During Sporting our our down $XX focus quarter, also on the will we ahead pay-down continue we paid approximately on debt debt, of million Products. separation Outdoor to and

we're on Before we challenging position of positions I operating sheet a I to from that, and company of in strength. maintaining of our is strong robust, I economic operating hand it over position outdoor economic And brands and want wallet. resilient favorably, this all are focused our to the company, industry to model of The proud a share reiterate thrive Jason, phases this am navigating balance clean cycle.

With that, me turn Jason. it you let to over

Jason Vanderbrink

everyone. Thank ever of and of been. strength. share stronger is six Sporting you, than good brands, Products Gary, in operations we've and morning, demonstrate There key themes that this terms wallet are today

one, Number healthy. the very is industry

of XXXX, factories more every ingenuity, two, of one single a is than During XX% background across cost checks while over operational collaboration the month XXXX. total Number driving downward, processed yearly culture self-determination. million NICS system enabling check footprint four and our a for increase

improving help our to while We mix, input are also higher this costs. offset doing

dynamic of which even largest American under the competition The in our of during brands three, balanced times acquisition brought stability improved and the imports. the same company, portfolio. of Remington intense Number ammunition two market XXXX has from

consumers, Number enforcement four, product new and provides pipeline the is our ammunition dedicated across law brands with high-quality that collaboration robust performance to military. our

the vendors we our market needs, their us of are to near-record few fulfill and five, to shelf. in at are provides with normalize more delivering which the customers a categories Number while profit us continues Number rationalizing levels. six, selecting share

immune we not Moving Gary have to the the macro pressures outlined. quarter, been from

City and Army by sales planned X-millimeter the down For Lake from were market exit contract. the the for XX% quarter, ammunition our and segment normalization driven

rising addition, interest confidence rates history higher and macro declining sales. have consumer costs, In affected

in the that us we resilient our know ever. is pressures, and made seen last ammunition more multi-brand patterns also and the business elevated have much environment. market strategy, We the adaptable dynamic would pandemic with cyclical, that transformations not offerings and during these demonstrated this Even

build demonstrate to A our now momentum. insight deliver positioned to adjusted NICS the into we has to indicator key of areas checks. through earnings ability on highlight how a are I'd ammo like to and that normalized continue on cycle, health the our industry

XX.X behind and of with XXXX million two ended XXXX a checks historically pandemic XXXX. third the years placing

the of a entered than high one leagues the of the entered gained users consumers the that country. the healthy of industry schools have consumer shooting sign new Estimates is have huge pandemic hunting show shooters more XX volume Another is and fastest-growing of since new and in new began across base sports the sports. million segments shooting

Our sports. Federal and CCI are brands deeply in rooted Remington the shooting

spurring For the the days hunting side, field to table field. in is more movement the

healthy of shooting baseline of engagement. increased All a next of promise signals of consumers generation and the enthusiasts this a sports

excellence. Operational

We continue within workforce gain factories best and we all world's of efficiencies. the have to our

match increase to areas structure a margins. our operations maintaining and been overhead teams that have costs of our lean are efficient cost We not structures by in all more quality. with help overhead never adding protect sacrificing demand, will Containing while profitability

that point, a research and deployment innovative that drive be development SG&A. higher driver. advantage the as humongous To products sales disciplined see our margins we capital a and focus on of the the and pipeline, initiatives will our in competitive We will

the well-known shotshell Since company's to be base adding or our impact the products personal category, predator overall The the Hevi-Shot our sports it business and leadership in hunting to brand waterfowl, and brand brings has exceeded the Hevi-Shot position metal our strength portfolio, shooting alternative hunting, portfolio for to solidifies expectations. of the protection. whether turkey positive

to brand leverage product plans the Hevi-Shot years continue extension. will for We in with out the

healthy increases we've that actions by profitability. accepted to Pricing. to market, categories signaled and Other and conditions taken of pattern the our of brands. a resulted been materials, distribution in activities have buying consumer our limited are increased of and cost retail select favorable channel the at and promotional reduce contributing price inventory X-millimeter To ammunition raw to preference pull-through Very we pricing industry seeing firearms. substantial freight, offset in labor recent widely are

where to premium best-in-class cost offerings factory use processes have risk. resources includes We've a our completed centerfire lower costs to our higher-margin synergies. plating major our modernization and and technologies across rifle we we demand category, in reduce nickel and of consumer core of Lastly, premium Modernization pistol our increase and for This to innovation. and plating the expect remain implementation each Anoka in backward especially of position, handgun increased strong. pistol bullets, for shared copper plants and healthy

have are facility cross-location new In on superior rifle offerings. quarter more addition, centerfire At we the in all lineup extensions to introduced facilities, In build line product four, and teams, an installed shot of ramp our dedicated Blitz expansion Remington we faster recent XX nearing teams Across that manufacturing is primer we path of that which completion. solutions. than show, the deliver expect up modernization products the already to Lonoke.

One attention the revolutionary and new greatly lever-action XXX straight-wall of is new caliber This accuracy of Buckhammer. Remington's is performance and for considerable capturing that innovations optimized is cartridges. the rifles improves

When and after performance. sought Federal's Hevi-Shot, matches Year the ammunition Power. innovation, and because comes longest it XX and Guns Ammo CCI, the & market the brand in of Super no their to its reliability are of peer our new Remington, and Brand products. Carry. brands of Speer magazine prestigious for power, in there designation Ammo Federal, awarded that is marketplace innovation Out Estate award-winning

of gun its Rifleman ammo quarter the XX of are choice Ballistics Federal as Other and by golden lock the best bull's-eye recent year. the and core every the the a designation bought ammunition best for new product Remington's category Super accolades for in were include shooting Carry survey, for ammunition recognized eye in American hand product for illustrated of a tip paying bull's innovations leading XXXX. ammunition CCI third Golden consumers brands year. These of purchasing for off. In

because year expectations our our continue of and take has in that emphasize balanced, want product and categories. ammunition XXXX rational are we share been pricing market profitable positioned of are is season all to in restored I the categories beating across are to portfolio product closing, maintain In to in our middle the a very marketplace booking we the portfolio. backlog healthy calendar solidly all we in of

drive Our manufacturing four nimble as unit. across lean we plants our operations a into plants, further and domestic continue operating efficiencies cohesive, synergies our integrate to

every world-class the Before work of Andy? management in I the want across each here Thank of to segment. days best concluding team and XXX dedicated to does right team the a thank proud year our build remarks, ammunition our sporting America. products my I'm employees the day you.

Andy Keegan

Thank you Jason focus adjusted will on to year website. our our found everyone. today and hello earnings the prior be and unless otherwise results Both comments in are results My adjusted as reported period website compared release and noted. included on can and

QX posted mix Turning of XX. record Product sales and per $XXX to approximately another the quarter. lower Sporting were freight We consistent Product of sales organic increased business including impacted activity, million slide sales commodities. and including were costs our and margins input that solid higher guidance promotional in volumes by with Outdoor quarter unfavorable

Gary Overall are we position from of a strength. as said, operating

and We wallet strong of participation are trends. seeing share industry holding our

sheet is our and healthy with Our expected. balance in what quarterly results we are line

FY recent sales For driven with most business our X% offset $XXX pre-pandemic year Golf down million, the Recall the double-digit QX total that organic XXXX a across at acquisition. decline XXXX categories, XX%. recent up several quarter, in our Compared FY fiscal in are year-end and our represents sales partially March. sales third total were by by

approach with promotional methodical activity to walked away to been our to having we've quarter, products sell discounted from the opportunities retailers. Throughout

margin the the retail and a images Some levels. without profile have on table, brand exasperating decision but sales otherwise our kept protected healthier the higher inventory been left may

$XXX million. very expansion XXX this points. activity, approximately points XX%, gross million EBITDA and of input EBITDA to basis due which Compared to FY XX.X%, XX.X%, higher X,XXX margin increased basis of margin to decreased decreased XXXX represents decreased commodities. costs strong. and shifts Gross with margin promotional margin mix basis contracted profit primarily freight to points remains including approximately and QX XX% X.X% $XXX XXX

and was XX% prior free $XXX decreased as interest and shares. We flow and year $X.XX, well free by gross cash X.X% to driven decline SG&A profit EPS year-to-date QX period. in expense. up outstanding a climbed a lower This lower robust quarter slightly over the in XX% by generated higher tax the cash offset million, rate to $XXX of flow as million

are flows were The discipline to our a Our financial balance given model. and in the environment solid prices. favorably business We our effective demonstrates in sheet cash materials despite positions the generate advantageous at as macroeconomic Sporting operating sequentially. of these current Products increase able the raw securing result quarter inventory our increase and

in our elevated to monetize a Our sequentially time inventory term areas and we the position Outdoor Products saw began inventory promotions through of as targeted segment with decrease move shorter to of inventory.

monitoring margins reduce long-term. We across while inventory and promotions for market levels our our competitive, remaining are to also our our inventory share brands, protecting leveraging and strategically all the channels

to XX. Turning slide

debt increased XXXX year-end Our balance sheet from to remains Net by acquisitions. fiscal strong. driven largely $X.XX billion,

ratio Within million the X.X leverage two of target and in debt times. within down to we approximately quarter are net still $XX one times at paid leverage our we

Our immediate is end. of million as quarter $XXX liquidity

forward, continue down cash we to deliver flow to are debt. pay free expecting on robust generate and to commitment our Looking

capital in we primarily calendar anticipate until year are noted we we which M&A expand, allocation to our we last As repayment strategy occur pausing XXXX. on debt is our focused quarter, on and

Our we our return shareholders. the long-term will that investments expect on is capital allocation highest drive strategy for focused

model multitude business invest to any cycle allows consumer in economic we Our given of us brands demographics. in in our a continually play

four performance. over flow in past balance and the free has discipline cash years financial strong sheet, strong resulted a financial record Our sustainable

and businesses wholesale let's as a and reduced from X% organic box partially segment Within turn increase international, declines other primarily we mentioned by Outdoor QX our results slide acquired record million in to to on due driven posted $XXX channels. of big golf businesses, offset Products other Now by sales an of purchasing XX.

outdoor to sales will business, to of in Product's we third POS was Outdoor compared organic accessories exceeding and sell-in by Sports comparison, were XXXX. sales to XX% carry expect QX which driven The In XXXX XX% into QX. due and up organic compared Action the the quarter primarily QX decline up

primarily business volume increased mix by to profit from businesses. Gross driven volumes associated season, partially in organic higher activity offset declines, from decreased acquired Outdoor promotional acquired and with Products businesses, X% million, unfavorable cost $XXX by holiday amortization

The XXX points margin Gross acquire basis points EBITDA basis $XX well organic lower primarily to margin decreased in to EBITDA XX%. X%, driven to was down higher XXX as XX%. declined gross million SG&A business. as businesses profit by the related

Turning $XXX with down to of announced the were Sporting shotshell as Products, and as beginning XX% the in well shipments ammunition line guidance pistol at the termination primarily driven million timing quarter. our channel sales normalized, by the lower of the of contract shipments has previously Lake as inventories City of

down mainly decreased offset XX.X% Gross profit was unfavorable and mix XX.X%. EBITDA million XXX freight points basis $XXX by increased partially million. to pricing. $XXX costs was volume, commodity to margin and EBITDA lower due

more a the Lake product as Sporting broader and more categories from and Plant. Ammunition product profitability a decision the of away disciplined profitable product and ammunition pre-pandemic Army from the Remington remains environment than a acquisition mix pricing purchased City less due more and result strategic vital to much the profitable of shift stronger levels, the to

activity. outlook. to inventory turn high-levels consumer revised spending, fiscal continue rates our contributed interest influence of promotional additional year for rising Inflation and retailer slide Let's to XX, XXXX to while

Retailers for have been inventory. adding reorder to the and additional sake of cautious slow

the of We are also to dollar. in international U.S. experiencing strength pressures the due the markets

risk taking costs. mitigate controlling several to and are closely by inventory actions managing We

inventory the which quarters note, to brands retailer as for DTC strong see in performance purchasing sell as a expect normalize for through demonstrated leading products And positive we demand. coming positions. our a and in overall indicator we retailers our is continue to demand their strong On

of we have guidance, to high-end ranges. our low guidance and Moving the adjusted

the $X.XX fiscal X% to full year-over-year midpoint. $X.XX at of billion For we sales expect the year billion down

sales XX.XX%. Products $X.XX to margins the of midpoint XX.XX% of at estimate Outdoor and the billion range the range adjusted new EBITDA Sporting billion billion, the $X.XX billion remains Product to with in $X.XX the same of $X.XX in to

cash million of to adjusted range rate Interest expense $XXX $XX and in of million and $XX $X.XX million, $X.XX flow $XXX effective approximately the tax EPS to to between free adjusted million. between XX%,

will we year As that in complete we separation XXXX. reaffirming are planned Gary calendar stated, our

me the separation. businesses briefly Product and touch on the Let to on Sporting relative both we Outdoor debt Products hold

currently asset-backed separation, part loans are facility As SpinCo. of credit facility, existing new loan in credit established the refinance Product with term asset for the a our and the and banks discussions the which we our Outdoor to includes fixed

have complete thus been state potential our $XXX after million We with we expect senior currently current business well-received with stay plant our to conversations and These Sporting continuing far their in RemainCo, are will Products separation. lenders. notes our meet actively of we

of We currently billion the dividend payout that expect ratio including find and down while long-term also times. We our senior $X.X a a is Sporting debt ratio believe that one approximately the debt this add Sporting will investors robust separation Products free cash maintain in business to to leverage flow two billion generated providing attractive. will by approximately Products after support $X notes business will paid and

reputation which and accretive our completion time business the Products as Outdoor able choice of at of debt industry. will minimal is be in to a the pursue maintain acquirer Our planned to at expected the acquisitions have separation, we

to free our robust cash financial continue closing, flow. to ability In results we solid and demonstrate drive

balance sheet flexibility Our strong low maintain given remains level. and we our leverage

We have and with to macroeconomics a resilient geopolitical strong these strategy times. wisely and during our the team execute expertise challenging operationally

measures mitigate proactive factors control risk. taking this are our within We on to further

The of our today's to call confident the years, we value. over company shareholder well have quarter company's four is purpose in the through and third long-term past We our positioned drive discuss the are to transformation future results.

and questions we transition announced As your discussing the beyond you focus we what hope on kindly you can outlook. have and will appreciate not that and results leadership financial request be we our we operational

for open please questions. Operator,

Operator

Instructions] [Operator our please go Securities. Riley your to is of first go Eric, question Eric Wold ahead, open. B. And line today

Eric Wold

you Two guess did some in for on ammo first off I you categories sustainable think guess long-term ammo talk inflationary I margin pricing the segment the and higher what through XXXX kind expectations for questions about mentioned you heading pressures. general XXXX the those increase of the morning. each response expectations? Good pricing that the gross segments. you environment can of two kind to one are you. Thank in are prices those current of retail how prices some and given at of

Jason Vanderbrink

Eric, -- mentioned pricing good category. Jason. X-millimeter is This we We on depends we're seeing the on it are small rifle. is What morning. retail

stuck You're action year Those pricing to could come long. some offset commodities. stick we thought pressures prices all and in retail have due We down pricing to obviously some the market. we seeing those where took categories actions margin the we on the expect

as the confident retail we're up. with what to overall as far pricing see input As at costs continue go pretty we category

at think the certainly I expect going down us see see any. it we today is right XXXX shelf don't tells anything we hold that given that to for go we now to what

Eric Wold

And kind longer term? gross of margin the expectations

Jason Vanderbrink

bullish mid-XX be As going to -- Products. that's we normalization to the our at going Investor it's normalizing Sporting still laid still Day, think EBITDA the of be for the out margins. we're market on EBITDA in We mid-XX

Eric Wold

consumer you kind within the talk retail your then side. Can own of question the Got patterns the sale kind of you Product and then where health -- just POS of what of maybe the it. consumer you're Outdoor and point about platform with quick that at gives a some And indication on e-commerce seeing the is.

started a inventory start sense this to trying would environment? trying in through shipping of get a sell normalized towards are that sense you more more think do a restocking? retailers kind how to Just of you product get do into if you of Just as --

Andy Keegan

appreciate that, This Eric. I Andy. Yes. is

is feel the in our that Products. seeing this POS Outdoor right in is demand So at strong what the retailers now. is sell-in than POS. down down we But year-over-year is the further the And we're

we period. As over our actual our are site up that mentioned actually -- time

-- see there. so And demand do is that we we're

shelves on Products. out stock seeing Outdoor We're in our

So, increase as expect which to we'll retailers their as see will start our over do going sell-in do that, quarters are up well. normalize that go start are purchasing some to stock-outs they as we POS missing that we the the in of that certainly coming to

to we're starting the are -- on repurchase. happen retailers what will once So bullish

Eric Wold

both. you, Thank Perfect.

Operator

please Mark, ahead. to Thank And Smith question you. next the Lake goes of Mark go Street.

open. is line Your

Mark Smith

guys. Hi,

question quantify a of the if away some Lake guys side back in ask maybe off First talk or the impact quarter of the ammo can the you Ammo. on and I wanted to the business. I City from about don't just know from

Jason Vanderbrink

morning. Jason. good is We Mark, quantify don't City. This Lake

year sales $XXX at fiscal contract we've million years ago. peaked had think released publicly a we when previous that I around years

So far quantify that as to we're going as Lake City.

Mark Smith

Action there Okay. the is that some looking can the at Action the as be impacting expectations and insights business, well, additional Sports any the seen would in Fox that then Fox in just us on And other side you curious business of other business, that is hitting any I'm of Sports slowdown particular insights internal we've give great.

Andy Keegan

a It's question. Mark. Yes great

large we So our Fox have Action Bell of experiencing actually EBITDA that fairly and a do arenas that Fox are sales have those adjustments is pressures already being they're we -- and the in identified. we've additional that They expectations the experiencing we're meeting the some between business the that see said, seeing. They I'd say But that from affected currency opportunities for we're were international we well which in synergies million. presence, $XX as quarter with Sports optimism the is. being US

lower current point. So that sales the Action of the as we price to their not bit are not the Sports demographic similar opening pleased they same with is to, who very little are sell The pressures. the and but with given results extent macroeconomic along some

they're given we So the that in you're Bell nearly seeing that area. not at our mass the reduction have business

Mark Smith

Andy? just million, Perfect. And confirming $XX was that

Andy Keegan

million. $XX Yes,

Mark Smith

guys. you, Thank Perfect.

Operator

to next goes please go Anna Thank you. And Glaessgen Jefferies. Anna, ahead. the question of

Your is line open.

Anna Glaessgen

Hi. for taking Good question. my Thanks morning.

Products quantifying could EBITDA? Outdoor the business, the and acquisitions Racing, from quantify overall but on the Fox thanks you impact sales On for

Andy Keegan

say give the that can expected amount. we in was you exact what the range. decline line with from What I in is can't which percent organic that I XX-ish quarter Yes, last was

line it So it we overall. expected with what come at in to was had in

Anna Glaessgen

expecting cleared, appreciate it. to need Got the a are promotional you more to promotions in the is as And in for I of some business. Outdoor I normalized Products get environment end markets? guess then those particularly channel when the

Gary McArthur

is Gary. this Anna,

that. that. expecting half. that world. second of a year to we'll could environment see to that Andy mean as I add more into of most retailers a the Let half the and looking little with a better Maybe think me tougher speak I expectations the we're first

Andy Keegan

that to we to that, into but ease, is we right exactly -- promotional clearing up. you're then we'll and elevated go think you'll expect still environment start we I going as as start continue certainly, see the we do through and QX, it QX to be the start clear

kind those with same that retailer the that inventories aligns It through of period. clearing

help coming activity. less us quarters, that expect and that will we As to we promotional facilitate in ease the said

Anna Glaessgen

publicly then, it. to would the XX Form Any thoughts one Got And when available? be more.

Gary McArthur

working SEC will they What the At we provided our is any couldn't I that we be SEC end quarter the of concerns with are say performance the on providing be and -- that can ended. clear that until questions to nine-month quarter, the the that, have.

then through quickly definite just working of would on as give to them and can't mind this assure can. with time, I or but you, related comments we're But it for we working we're be you it. working I questions a We top through as any that. sure is

Anna Glaessgen

Great. Thanks.

Operator

the And you. of go question please Thank ahead. next ROTH to Koranda Matt, MKM. Matt go

line open. Your is

Matt Koranda

morning. guys. Good Hey,

Just any blended to the split assume on Sporting and or the volume XX% basis the up. on a price way would I decline think segment, you the within quarter? were Products pricing about quantify

volume a top more full feed like more in that should than looks how price So XX%, quarter. does does provided. that the But think there? volume deterioration about imply in then that of sort versus outlook fourth you the into maybe bit the we little It down line how year

Gary McArthur

little me let add bit have to that. then will Andy Well, Jason and maybe a start

Jason Vanderbrink

morning. Good Matt. Hey,

to guidance far we was that pretty volume the comfortable about then range. as the fourth due had third the question as the for with the last driven, for million And given $XXX it opening quarter, guidance as had million directly, in far we we're quarter, that you what mostly remarks. As $XXX talked quarter,

Gary McArthur

to anything want Andy, you add?

Andy Keegan

Yes.

Matt Koranda

Okay.

Andy Keegan

that pressure. was that actually we I has pricing been talked up think, about up. there was under net-net, -- as price certain the -- for are categories price Well, actually net-net But versus year, last

So price up. the by offset going decline volume was

there's price price, Now, there drive some that. that up. is pressure would I overall, But, on some mix in say,

Matt Koranda

Outdoor in the any you that you performance? you've the Okay, in the of and call seen on strength more basis. have guys as Product couple year-over-year if also, the could specifically some DTC just great. You Q&A. out seen can prepared clarify a you've those And if where side, mentioned highlight well, then both a on of times remarks And pockets positive

Gary McArthur

pockets performance seen touch We've great well. -- snow Maybe, we've Obviously, DTC Yes. more in on I of can at as experience good can lot of you Simms. some had but a add it. Andy, details,

Andy Keegan

what in did experience the is There most Yes. general, would results. they did hunt/shoot say, align the are to experience were but pressure, under the In across I POS seeing talking down sites pressures. with ones that you're majority better the the that category we're That board, continued of overall. one the which somewhat

what than highlight a wholesale what our in But seeing the is themselves. is, I it's think retail less we're and channels

though demand as through we'll So, that there the our us to gives is of channels. down which, come pressures move I us, seeing in for that earlier, it's we the wholesale down, less, see and back it said continue is some we're indications, it as

Matt Koranda

offline. Thanks, I’ll the Okay. guys. others take

Operator

Ryan, goes Thank go final of please you Blair. question you. our And to ahead. William Sundby Ryan today

open. is line Your

Ryan Sundby

some stock-outs. give versus Yes. breakdown that I are under, both mentioned Could of percentage inventories, us total, correct, the think, at Hey. in over Good versus questions. it's morning. retail? is inventory but then categories Thanks of you what you retailer high Andy, Gary, for portfolio showing other the rough a you've had

that I board, resellers that their then, or think, in for to just the you the of taking quarters specific categories? normalize And is next of mentioned couple ordering really patterns. Is across couple a

Gary McArthur

speak that. to have Andy me Let

Andy Keegan

help clarify Yeah. Ryan, it's a great question. I'm here. glad we can

in inventories pockets that shape. bit would whole good the inventory, actually fairly in There fairly we little are actually is, I feel on but not general, is a say good thing first actually it's So are our over shape.

retailer When category. is, category talking but that in in category their carrying. and of that our may total all be heavy a we they're in total they're all we what we're inventory they inventory, inventory if about products, anything say the be And it purchasing might by not just see not

that seeing we're now. right And so happening

trying we're that so them. to And work through with

in as areas. others out. well had they're certain And stocked Just we said, stock saying we out just aren't

So through pressure we can some us. causing is clear on that that until

talked we that inventories of about. our So where we've heavy the are areas some is --

we'll basis. we retailers now. And inventories. through more these consistent fairly inventory fiscal move that actually think seeing a they the and able them We heavier those look on the just -- be going start outdoor But a cooking at to move total, has through right it's And get little bit shape. to at are in year-end, as their good reorder

Ryan Sundby

that? a that it. Got we premium on versus portfolio? more about, is discounts price more how how opening then, you just that seeking widespread items does Again, maybe or for That's And the points? helpful. promotions. look in categories? your are the And you're across specific either like your out it really talk Can seeing little Is

Andy Keegan

well We discount. fairly level through That holiday -- about didn't seeing the having Stone aren't is is premium talked it same they split season. not -- on I any our weren't the the think so that seeing Glacier premium items, They discounts.

our top So, discounting. end of aren't levels products same of seeing some the

what were activity. noted a -- season talking we of without in buyers seeing on holiday about wouldn't and what -- and our this the sites during items, look, weren't heavy is the they channels we the purchase. note point would but the on the is, discount kind did mid-to-low-price you The The we --

to DTC through to inventories maybe They to on especially But retail -- as is that forward, necessary the try that through move in We promotions to move we channels do continue. go the it so that that. monitoring. going think sites our less be will is we're something

We are so, more -- is upper. points on the lower but it the price versus end

Ryan Sundby

it. Got

Okay. Thanks guys.

Operator

you. Thank

Gary, back questions. hand to further for We have no remarks. I'll closing any

Gary McArthur

Okay.

comments. Let a me few make

is a be better. it we're company and going this great to even on aware making you're As laser focused

experienced very who CEO deep great for employees, be be several We management the talented a included in really by have am I search hard. fortunate the work surrounded team, and Vista will Outdoor, position. of which to

solid a We iconic had to work to are we're quarter, even done. leverage. hard to better aware but XX We we work be that have there's going brands

hard future. It's you committed that. very with Thanks We're talking want to We XXX% to towards And on spin we'll calendar bright. And your time year. in shareholder call. the further. to about are forward I that And today rewarding. look just leave that are ensuring we to this optimistic working you for the you be completing we'll be the

Operator

Thank now much for you today's so Thank you. concludes joining. This call.

You may now disconnect your lines.

Vista Outdoor (GEAR) 2 Feb 232023 Q3 Earnings call transcript